GBP/USD - one trade a day

yeah I'm SL the last two days, up around 15pips on monday (my modified rules) so still down around 3% this week. However I had a few scalps that did very well for me so in total the (demo) account is up around 3%.

It's hard for me to leave the EA to open and close the trades with no input from me but I keep trying to think long term. Instead of fiddling with it, low risk scalps on the same account is my answer.

If I modify the rules to 1% risk per trade I can probably cap my drawdown for the month safely around 5-6%

I'm 90% I'm going to go live with this now, combining it with small scalps will help me manage the risk even further. In a worse case scenario I need to scalp around 1.5% a week to make this essentially risk free for me, so fairly conservative.

I'm thinking of a $200 account trading 0.01 lots will give me 1% risk for 20pips. After a month maybe add another $200 if it seems sustainable?

What do you think cgrey, I have learned a lot from your attitude. Am I right in saying that you trade fulltime and aim for 10% per month?

Starting small is a good idea. Of course, that is totally up to your personal tolerance. "Small" to two different people can mean two different things entirely. In this case, it should be an amount you would consider safe to lose should you blow the account. As you said, you can always add to it later.

Yes, I do target 10% per month return in my business plan. I manage my "real" trading account slightly differently, though, because I'm a long-term trader. My 10% target per month is based on "locked-in equity" as opposed to account balance. There are times when I will have positions open across monthly boundaries, unlike this system where we know we will be flat 23 our of 24 hours each day. Unlike what I've been preaching here, I don't close any positions because targets are reached. In fact, the vast majority of my trades will close by stopping out, but my stops are adjusted regularly, so they're (hopefully) always in profit when they do

Conceptually, though, I think your approach is solid. Don't bank on the "scalping 1.5% per week", though. That can be a lot easier said than done. 6% per month from scalping takes a lot of talent. That's not to say that you don't have that talent, but take an honest look at your trading history (live and demo) and ask yourself if you've been able to consistently return 6% per month from scalping in the past. If you haven't, it may not be reaslistic to assume you will start to now, so you may not want to consider that as part of your overall plan. I tend to plan for "worst case", and anything better makes it a good month

Aside from my fundamental-based trading, I trade a couple of other methods "on the side". I treat each one independently - analagous to "products", I suppose, using the business analogy. They each have their own trading account (with different balances). I don't assume I can supplement one with another. I think that can be a dangerous path to go down. Leads to emotion and over-trading one system (that's when mistakes start happening) to compensate for the losses of another.

Hi,

If we are on the lucky side one month, perhaps just a couple of pips away from reaching the target of 10 %, would we close our order when we reach 10 % or when the 08:00 candle closes as per the rules?

I was looking through January and if we reached the target during the first 10 days. However when reaching the target, if the trade stayed open until 09:00 GMT, we would have gained 63 pips, only needing 5 pips, so the profit for the month would have been 17,7%.


Archie

You could adjust the target beyond the 10% to make the trade 1:1 risk:reward, or just be happy with what you have for the month. Really, it is up to you how you want to handle this. Don't think of the "rules" as something you must follow or horrible things will happen to you - use your best judgment for your risk tolerance, and make the system your own. If you're comfortable with the scenario you described above, by all means, do it.

Hi yeah I see what you are saying, worst case is very important. I'm thinking of 6% a month as a worse case as the EA wont open any more trades after 5% DD.

Can I scalp 6% in a month? On a demo account, yes absolutely I'm almost certain of it. I probably didn't make myself very clear, up until now I have only been trading a demo account, this would be my first live account. So the $200 would be the first I have staked.

I can expect 10% return on demo money a month if I spend around 2-3 hours per day trading, that is 4 or 5 days a week trading the London or New York opens. I'm in the UK so I'm lucky in that they are 8am and 1pm for me.

Can I do the same on a live account - who knows! But I have found in my life most of the things people put down to skill / luck are based more on not giving up than anything else.

I understand this is a little off topic but how did you transition from demo to live? Did you trade a tiny account before you went ahead and borrowed money from the bank?


dave.

I am not sure how you managed that. According to my broker's feed:

0:00 GMT 1.6157
8:00 GMT 1.6196
9:00 GMT 1.6215 (High 1.6220 and Low 1.6192)

Since the price at 8 GMT was higher than 0 GMT, the rules state we should go short. However, the price moved in the opposite direction. Have I misunderstood the rules? Can someone please confirm?

Essentially, the hawkish MPC minutes published at 9.30 GMT pushed the GBP higher (the markets are expecting an interest rate rise sooner rather than later).

Thanks,

The short version...

I went live after close to 2-years in demo. During the early demo days, I had very limited time, so I was really only devoting an hour or two a day to trading or learning how to trade. When I opened the first live account, I was still basically trading "systems" based on indicators. I've always kept a demo open (and still do today) for testing new thigns before I incorporate them in to live trading. Yes, my first live account was pretty small, and I blew it up in about 6-months. Blew up a second one around a year later. Finally, by the third one (stll pretty small) I was beginning to get a little better at trading, and I was able to hold on to it. I slowly built that third account, both by compounding and regularly adding to it. About 4-years after I opened my first live account, the best and worst thing that could have happened did - I was laid off from my job. I had been planning to eventually transition to trading full-time for a living for about a year when this happened. Whether or not I was ready for it, I looked at it as my opportunity to become a full-time trader. With all my new free time, I began studying global economics and markets in general, and slowly transitioned my trading to fundamental based as opposed to indicator focused. That was right around a year ago. So, I visited my bank, got a loan to properly fund my business and since then, trading has been my business, full-time. My only regret is that I didn't get in earlier, rather than spending almost 25-years in corporate America before realizing my dream to be independent.

Hello everyone. Some nice comments today. Once again cgrey brings some solid advice and suggestions as to the business planning side of things. I also employ different strategies using separate accounts for each one. I think that's very simple, safe and prudent.

This system is like every system that is profitable. It requires patience. Consecutive losses will happen. In fact, they will occur more often than single winners. Sure it would be nice to hit 10% in first couple days, but I can wait a few days/weeks longer .

Dave, hats off to you if you can scalp 6%/month. Any tips you care to share? haha. I could probably profit some extra by scalping also, but that requires full attention and quite honestly don't think it's worth the time or risk-for-reward it requires. I rather set trades on the larger timeframes (daily and up) and check in once or twice a day. That's what makes this system attractive. All you need is half a brain and the ability to check in with your platform right before 8 GMT and at 9 GMT. With an EA you don't even need that much. This method also helps build a nice foundation for understanding money management.

Not sure I'm qualified to give advice! But I trade EURUSD because of the spread, usually around 1pip on OandA. I can't imaging trying to scalp with anything more than that. I have found PA very readable on the small timeframes, I use S/R levels, trendlines and candlestick patterns the same as someone on the 1HR chart would. On the 10sec chart they happen many many times in a session so I guess it's quicker to build up knowledge as you are seeing them so often. I also have MA's and a tweaked Stoch on a seperate M1 chart (my long term chart! ) to give me an idea of direction over the session. I have close to zero interest in any of the larger timeframes when trading with this method, but I make sure I know what news is due out, as the change in spread could easily stop me out. All pretty standard scalping theory I guess.

I think one thing I think I may do differently is that I don't try to predict how big a move will be and set a fixed TP. If I can see a move I will enter and then take profit based on what price is telling me. Any real signs of weakness and I am out.

On the subject - I've decided to man up and register with OandA as now I understand you can use MT4 on live accounts there is nothing stopping me running this live. So when I have been verified and transferred some cash (I think $200) I'll be scalping and trading my modified version live by EA.

The changes I have decided to go with are:

Risk at 1% per trade
winners to run
DD capped at 5% per month

Also I may include my experiment to open extra trades based on how quickly price takes off. I will probably do this manually at first.

I probably wont post my results here as the modifications I have made may confuse some people checking in for the first time. Perhaps just post if I have made 10% or lost 5% and see how this stacks up with everyone else.

Anyway I just need to photocopy my driving licence now...


dave.

wow what a day!

The logic in my EA was happy with the take off and opened another position for me. Unfortunately my wife isn't very well today so I've been looking after her and I haven't been able to check on the trades until about 20mins ago - I have closed both and taken about 2 x 20pips.

I wonder how many of the 70pips I would have got if I had been watching? Still a bird in the hand and all that.


dave.

Congrats, Dave.

Perhaps a separate thread would make sense... I absolutely don't want to discourage you from posting results, but since this is clearly very different from the original system (and is being traded by EA), it may lead to confusion here... It would also give you an opportunity to expand upon your modifications while keeping us on topic in this thread.

6.5 pips for me on Oanda - manually taken as the ea sucks big time

Anyone got a ea that works PLEASE

understood sir, as I have said before I absolutely don't want to derail what you are doing here.

This thread has really opened my eyes - honestly I can't thank you enough. You are doing exactly what I plan to - system (probability) based trades, looking for realistic gains that will pay off long term. I plan to have as many of these 'products' as possible.

On OandA today I have the gain as 12.8pips on a M1 chart so depending on how quick it moved in the first few seconds, how long the order took to be place etc + the spread you might not be very far away.


dave.

Manually trading, I made 10.5 pips today. I could have made more if closed 20 minutes earlier (~ 30 pips). Here are my ticket details:

Ticket : 9596168
Market Name : X GBP/USD Rolling Daily

Stake :2
Action : Sell
Price : 1.61559
Market Expiry : 5/11/2014 21:00:00

Trade Executed : 24/2/2011 08:59:15

The above trade has closed/part closed the following positions:

This position was closed :


Trade No : 9594733
Market Name : X GBP/USD Rolling Daily

Created : 24/2/2011 08:00:04
Amount : 2
Action : Buy
Price : 1.61454

P/L : 21.00 (GBP)

Total Profit/Loss : 21.00 (GBP)

I'm definitely interested in what you've come up with. And I'd guess others are, too. Should you choose to elaborate in another thread, I will definitely be following - and feel free to link to it from here to show people where it is.

Thanks for understanding how I'd like to keep things "simple" here.... We see far too many threads on FF turn in to 30 different versions of the same system - with each new contributor adding complexity, and after a while nobody can follow what is going on, and it becomes a huge mess. So far we've been lucky, but I'd like to try to keep this as "generic" as possible...

Now that we're several hundred posts in to this thread, now would be a good time to remind people of my request in post 1. Please DO NOT post any EA in this thread. If you develop one and want to share it, I have absolutely no objection - just create a new thread for it, please.

Nice to see some folks had some success today by taking the concept and working with it to their taste. Keep it up!

Cgrey and All.
Many thanx for a wonderful thread and community. Have just finished reading all and am up to date, phew!
I am sorry but I have a newbie question to ask; How do you 'back-test' so far? My broker 'igindex' will only go one month back?
Once again, Great Thread

I back test with MT4 strategy tester - if you go to tools / history centre you can download the data for the pair you are interested in (GBP/USD) in this case.


dave.